An unofficial truce has taken effect in the Gaza Strip where Palestinian militants have nearly stopped rocket attacks against Israel. This lull follows a violent period in which more than 120 Palestinians were killed in recent Israeli military offensive. VOA's Jim Teeple has details from our Jerusalem bureau.

Israelis who live along the Gaza border and Palestinians inside Gaza are breathing a sigh of relief as hostilities in the area have dramatically dropped off during the past several days.

Israel's Army Radio reports Prime Minister Ehud Olmert has ordered Israel's Defense Forces to stop air strikes and ground incursions as long as Palestinian militants refrain from firing rockets at southern Israel.

In comments Monday, Mr. Olmert says Israel remains committed to the peace process, despite last week's terrorist attack in Jerusalem that killed eight seminary students and the hundreds of rockets fired at Israel from Gaza recently.

Israel's prime minister says he will not give up what he describes as a huge effort to keep taking important and even dramatic steps to advance peace between Israelis and Palestinians.

Last week, Mr. Olmert said Israel would stop attacking Palestinian targets in Gaza if the rocket attacks halted.

Egyptian officials have been holding intensive U.S.-backed talks during the past week with Hamas leaders to try to reach some sort of an unofficial truce. A formal agreement between Israel and Hamas is extremely unlikely because Israel will not negotiate with Hamas, which has refused to recognize Israel or renounce violence.

Any formal truce with Hamas would also undercut Israel's relationship with moderate Palestinian President Mahmoud Abbas, whose Fatah forces were kicked out of Gaza last year by Hamas militants. A Hamas spokesman says if Israel wants the rocket attacks to stop for good it must reopen border crossings between Gaza and Israel and Egypt and Gaza.

Meanwhile, Palestinian negotiators are scheduled to hold their first round of talks with Israeli officials this week. The talks were suspended last week, following the increased violence in Gaza.

Palestinians are also expressing frustration with an Israeli decision to build 400 new homes in a East Jerusalem neighborhood - on land Israel seized in the 1967 Arab-Israeli War. Saeb Erekat, a senior Palestinian negotiator spoke on the Voice of Palestine radio.

Erekat says his team is surprised by the Israeli decision and that peace will be impossible if settlement construction continues. He says Israel needs to choose whether it wants settlements or peace.

On Sunday, Israel announced it planned to build more than a thousand new homes in the occupied West Bank and in East Jerusalem. Israel radio reports the right-wing religious Shas Party, a coalition partner in Mr. Olmert's government, had threatened to quit the government if the construction projects were not approved.